HEDGING TRADES

Hye guys 

Hope you all are doing great .

So today i am here to discuss with you all about HEDGING/HEDGING TRADES .

So what is Hedging in FINANCE??

Hedging in Finance is against Investment risk that is strategically using financial instrument or marketing startegies to

offset the risk of  any adverse price movements .

So basically hedging is a technique not by which one can make money but through which we can reduce potential loss.

So the next question that arises is

what is HEDGING TRADING ???

RIGHT!! HEDGING TRADING or hedging in trade ??? 

A hedge is an investment position that is opened in order to offset potential losses of another investment .

Think of hedging as an insurance for a given  investment .

So now many people have this question in mind ,is HEDGING ILLEGAL ???

One of the ways hedging increases customers cost is by doubling the expense of entering and exiting the transactions.

If one hedges one must have to pay the entire spread twice 

What is SPREAD ???

SPREAD = ASK RATE - BID RATE 

Another reason why NFA banned hedging is because it generates significant potential loss for abuse.

Example of hedging is like we have an investment in an asset and we want to protect it so we take insurance for it.

So ithe last question tahat arises is that whether hedging a good strategy or not ??

Well as we are now aware it is just for reducing losses you cant earn profit through it .

So thats a brief about hedging in trading .

Hope you guys find this article insightful and interesting as well as helpful

Thanks.